Monthly Archives: February 2019

If you haven?t been paying your bills on time, perhaps you should be concerned. Photo: Quentin JonesMajor changes to credit regulations are afoot that will add to the information licensed credit providers can share with each other. Until now they had not been able to supply comprehensive repayment history, but all that is about to change. From March 12, your bill-paying habits are being watched.

What are the changes?

The changes are to the Australian Privacy Laws, which will allow information additional to default data and failed lending applications to be included on your credit report.

This information now includes 24 months of your repayment history for loans, credit cards and other credit. So if you haven’t been paying your bills on time, perhaps you should be concerned. But on the positive side, if you pay regularly, this is new information that a credit issuer will be able to consider.

The peak body for credit providers and credit reporting bodies, the Australian Retail Credit Association (ARCA), has launched a website (creditsmart.org.au) to inform consumers about the changes. The launch follows research that found many consumers were not only ill-prepared, but also unaware – 59 per cent – of what was about to happen.

”What awareness existed was negative,” says the ARCA’s chief executive, Damian Paull. ”We were concerned that consumers … wouldn’t have access to, or might not be able to understand, what the changes mean.”

The new data

It’s important to realise that credit providers will be able to collect and disseminate only repayment history information from other licensed credit providers. This means that your repayment history for your telephone, mobile, internet, utilities, etc, will not go on record.

However, other information about whether you have any of the above products will be able to be collected. ”Telcos and utilities can share the additional four data elements,” says David Grafton,an executive general manager with credit bureau Veda.

Those data elements are: The type of consumer credit; the terms and conditions; the credit limit and the day on which the consumer credit begins and the day it is terminated. ”That will also help consumers who don’t have a credit file now because they are not in the credit system, but a lot of people do have mobile phones. While repayment history won’t be there for those products, the fact that they [consumers] have them could be,” Paull says.

Communications

Paull says there are no requirements about how banks must notify you before they start collecting information. ”Certainly there is a requirement under the legislation – organisations entitled to collect that information are required to disclose,” he says.

Most credit providers will have notified their customers of the changes and you should have already received a letter. For example, ANZ has sent a brochure to all existing customers, and is notifying customers who have signed up for products since then.

Commonwealth Bank notified all its customers with a letter accompanying its statements in January. Westpac said it was ”working through how we will communicate to customers about these changes”.

Your credit report

All this information now forms part of your credit report. This has always been available to you, but it can now include the extra data.

”Remember also that credit providers are not going to suddenly be supplying this information from day one,” Grafton says. ”It’s going to take a couple of years [for all the information to become available].”

Organisations, such as Veda, Dun & Bradstreet and Experian Australia Credit Services, provide credit reports and credit scores in some instances, but you also have the right to obtain once a year one free credit report from each credit reporting body, as their reports might be different. You can also get a free credit report if an application for credit was declined in the past three months.

According to research conducted by Veda, many of us don’t even know we have credit reports. ”[We found] 80 per cent of Australians hadn’t checked their credit report and more than half of them didn’t realise they had one,” says Veda marketing manager, Belinda Diprose.

The best reason to obtain your credit report, particularly if you’re having problems obtaining credit or loans, is to work out how to fix it. There could be a mistake by the credit reporting agency, or the creditor, which could be easily fixed. If the creditor won’t help, contact the Financial Ombudsman Service or the Credit Ombudsman Service.

Of course, the best way to make sure you’ve got a clean record is to make sure you pay all your bills on time.

This story Administrator ready to work first appeared on Nanjing Night Net.

Some people have given up the volatility of shares to simply trade ETFs. Photo: Louise Kennerley

Two weeks ago I was telling you that investors who wanted a diversified portfolio in a particular asset class without having to manage it themselves could buy Listed Investment Companies (LICs) on the ASX.

This week we are going to look at something conceptually similar, Exchange Trade Funds (ETFs). Like LICs, ETFs are traded on the ASX. That means you can buy and sell them just like LICs and shares.

But there are some major differences between LICs and ETFs. The main one is that, by comparison, the LIC market is a rather small domestic Australian affair, while the ETF sector is the plaything of the much bigger international investing community.

For instance, there are just under 60 Listed Investment Companies on the ASX with a total market capitalisation of around $23 billion, with the three biggest (AFIC, Argo and Milton) accounting for 57 per cent. But up the big end of town there are around 100 ASX-listed ETFs with a market capitalisation of $160 billion.

While the LIC market represents the Australian listings of mostly Australian fund manager offerings, they are of almost no interest to anyone outside Australia. The ETF market, on the other hand, represents the ASX listings of much larger internationally traded ETFs that have tiny exposures to Australia, if any, and are of interest globally. And that’s just the ones listed on the ASX. The global ETF market is 10 times the size with over 1500 ETFs on issue worth close to US$2.4 trillion. Only some are listed here.

The biggest is the MSCI EAFE ETF with a market cap of $41.5 billion. It invests in global large and midcap equities outside the US and Canada, so is used not by Australian SMSF investors looking for a diversified domestic portfolio but by international, mostly US, institutional and private investors looking for exposure outside the US.

The next biggest with a market cap of $23 billion is the iShares Core S&P 500 ETF, which invests in large capitalisation US equities.

Of the 100 or so ETFs listed in Australia there are (just) 10 broad-based Australian ETFs and 11 Australian sector ETFs that are only worth around $4 billion, or just 2.6 per cent of all the listed ETFs in Australia.

International ETFs

The bulk of the ETF offering on the ASX is made up of 23 international ETFs instead, ETFs which offer ASX listed exposure to MSCI (Morgan Stanley Capital Index) country indices as well as exposures to the S&P 500, the Russell 2000, Emerging Markets, Japan, US small caps, China, South Korea, Taiwan, Hong Kong, Europe and Singapore, to name the biggest. There are also three international sector ETFs covering the healthcare, telecoms and consumer staple sectors (accounting for 1.2 per cent of the sector), three currency exposure ETFs (0.1 per cent of the sector), 22 commodity exposure ETFs (3.3 per cent), 11 cash and fixed income ETFs (0.3 per cent) and 11 ”Domestic and International Strategy Focused” ETFs (0.6 per cent of the sector) which includes an “Australian equities bear hedge fund”.

A number of new breed ETFs include a ”Dividend”, ”High Dividend”, ”Top 20 Australian Yield Maximiser”, ”High Yield”, ”Value” and ”Select High Dividend Yield” fund, all of which pander to the Australian ”safe income” theme and have only been listed for a couple of years.

Apart from Betashares, who have 12 ETFs, other issuers include iShares with 26, Vanguard with 10, State Street SPDRs with 14, EFT Securities with 15 commodity-based ETFs, and Russell Investments with five Australian funds. Try their websites to see their products. There is a lot more to cover on ETFs, for instance, some are ‘Conventional’ and some are ‘Synthetic’. There are different risks with both. Liquidity is often an issue although some are so highly traded there is no issue.

The good thing about ETFs is that they all trade in exactly the same way as any other shares on the ASX. So you don’t have to change anything, just find out their codes and what they represent. Some people have given up the volatility of shares to simply trade ETFs.

It’s a lot easier making a few decisions each year about which country, sector and currency than it is managing the volatility, decision making and paperwork on 20 separate equities.

If you liked LICs, have a look at ETFs. There are more of them, they cover more exposures and they allow you to do man-in-the-moon investing rather than Australian tunnel-vision investing.

On top of that, the management expense ratios (fees) range from 0.07 per cent to 0.7 per cent for the big ones, rather than the 2 per cent-plus you can get charged in unlisted managed funds. Of course, you’ll be paying a commission in and out. Then there’s the spread. Then there’s the premium or discount to NTA. It all adds up again.

This article sounds like a sales pitch, but it’s more of a heads up, it’s not all glory in ETFs, but it may be worth a narrow-focused Australian investor educating themselves about them, at worst it’ll make a change from waiting for the bull market. Not everything is on the equity cycle. Have fun.

Marcus Padley is the author of the stock market newsletter Marcus Today.

Click here for a free trial.

This story Administrator ready to work first appeared on Nanjing Night Net.

Ups and downsThe Aussie dollar has been bobbing like a cork on the ocean in recent times, as the jawboners from industry and government try to talk it down for the good of exports, while market traders look for opportunities in the turbulence as the emerging markets story unravels.

The Reserve Bank of Australia’s recent decision to keep record low interest rates of 2.5 per cent on hold actually spiced up the currency a little, pushing it back above $US89¢ from lows just over $US86¢ inmid-January.

But looking over a longer time frame, the Aussie has been on a downward trend. But as this week’s chart, produced by Philip D’Souza, a director of the Australian Technical Analysts Association shows, the currency now appears to be on the cusp of an upward trend.

Last time we looked at the Aussie back in early October we applied Elliott Wave theory to the chart and the currency performed almost exactly as that analysis suggested. Then we had the currency coming off lows of $US88.49¢ and heading northwards on what we identified as the fourth upward leg of a five-leg Elliott Wave formation.

That fourth leg peaked out at $US97.58¢ on October 25 using a weekly chart. The downward wave five then kicked in pushing the currency down to $US86.60¢ on January 24 (using a weekly chart). There are two phenomena on the chart suggesting that bottom could mark the end of the downward fifth and final wave of the formation.

Firstly the decline from point 4 on the chart to point 5 represents an almost exact 127.2 per cent retracement of the gain made when the currency climbed from point 3 to point 4.

This is a significant Fibonacci number retracement level where most bullish or bearish trends tend to end.

To that is added a Fibonacci time count, the 13 weeks the market took to get from point 4 to point 5. That 13-week interval is seen as an indication of a possible counter trend rally, especially in this case where Fibonacci series on both price and time count coincide.

So watch the weekly chart of the Aussie. If its weekly price chart closes over $US88.49¢ and then $US90.86¢, the Elliott Wave pattern will be said to have completed and a counter rally may take hold. Green lines on the chart show resistance points to expect in such a rally.

Photo: Michael MucciQ My mother recently had a stroke and is now unable to live on her own. We are hoping to move her into our granny flat and sell her house, which is worth $430,000. She is on a full single pension. Will her pension be affected if we sell her house and move this money into her savings or super?

Do we need to consider our tax situation as well?

A If your mother moves into your granny flat, sells her former home and pays nothing for the right to live in the granny flat, she will be assessed as a non-homeowner. Non-homeowners can have assets of up to $339,250 and still receive the full pension. As your mother’s house is valued at more than this, she could exceed the asset test limit and her pension would be reduced by $1.50 a fortnight for each $1000 she is in excess of the limit.

Homeowners and non-homeowners are both subject to the same income test.

The limit is $156 a fortnight – when your mother’s income exceeds this, her pension is reduced by 50¢ for each dollar of income above the limit. Whichever test, asset or income, produces the lowest amount of pension is the amount she will be paid. As a non-homeowner your mother may be eligible for rent assistance.

Family arrangements involving granny flats can be complex, financially and emotionally. Your mother may want to consider a number of strategies, including how best to hold her savings, and whether or not she should invest more in her superannuation (if she is eligible). Keep in mind that any strategy will have consequences for her pension (including eligibility for rent assistance), cash flow, tax and estate planning, and these will need to be considered. You should seek advice from someone who specialises in this complex area.

Q My wife and I are both aged 28. I earn $75,000 a year and she earns $60,000 a year. We are totally focused on buying a home and are saving $1000 a week. We have saved $30,000 to date and are looking to buy a home for $650,000. Our biggest expense is rent, of $1890 a month.

We could buy now on 5 per cent deposit, but would be up for nearly $25,000 in mortgage insurance. Do you think we should buy now and pay the mortgage insurance or wait until we save 20 per cent?

A Unless prices are stagnant in the area where you intend to buy, you are probably better to buy sooner rather than later. Otherwise, you face the possibility that the increase in the value of the house you want to buy will outweigh any savings in mortgage insurance. Keep in mind that mortgage insurance can vary from lender to lender. It may be worthwhile consulting a good mortgage broker.

Q I am 65 and was made redundant last year. I own two properties debt free, which are worth $700,000 combined. I live in one and holiday let the other. I have very little super and live on a line of credit that cannot go on forever, so have placed the holiday house on the market. How would you suggest I invest the funds after the house is sold?

A First check with your accountant to find out if there is any capital gains tax payable on the sale of the property. If so, you will need to keep cash aside to pay it. If you can pass the work test, which involves working just 40 hours in 30 consecutive days, you may be able to reduce any CGT payable by making a tax-deductible contribution of $35,000 to superannuation from the proceeds of the sale. This is the time to be talking to a good adviser to agree on an asset mix that suits your goals and risk profile.

Q I am single, own my one-bedroom flat and am contemplating taking out a reverse mortgage next year when I turn 75. I am concerned about how this might affect my current age pension. My allocated pension is almost exhausted, so by the time I take out the reverse mortgage, I will have no significant assets other than household effects and a car.

The reverse mortgage would be arranged as a periodic draw-down of $600 a month to supplement my age pension. There may be an initial lump sum drawn-down of $15,000, which would be used immediately for renovations. The funds drawn would then be used for living expenses, strata levies and medical expenses.

A There should be no adverse Centrelink implications if you make small withdrawals as planned. Just try to draw it down as slowly as possible to minimise the compounding effect, which is going to happen, because you are not paying any interest on the reverse mortgage.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Email: [email protected]南京夜网.

@NoelWhittaker

This story Administrator ready to work first appeared on Nanjing Night Net.

Sochi: Just a day into the Winter Olympics, a worrying photo started circulating around the journalists in Sochi.

Yahoo! senior investigative reporter Charles Robinson took a snap of a man in a press workroom at Sochi, wearing official accreditation, holding a reporter’s laptop and a strange triangular device.

“Happening right now: This guy is going computer to computer in the press room scanning the laptops of everyone here,” Robinson tweeted.

Happening right now: This guy is going computer to computer in the press room scanning the laptops of everyone here. pic.twitter南京夜网/ii9cSpWeuK— Charles Robinson (@CharlesRobinson) February 8, 2014

Paranoia about Russian government surveillance immediately went into overdrive.

“Can he read your hard drive?” asked one Twitterer.

The reality was more prosaic: he was from a “spectrum management team”, making sure media weren’t setting up their own Wi-Fi networks, which would interfere with the official ones used by the rest of the media and Olympics organisers.

Nevertheless it struck a sore nerve. Many of the media are worried about how secure they are.

There is real reason for concern: the Snowden revelations show how good governments are at eavesdropping on digital communications.

According to a report in The Guardian, athletes and spectators in Sochi would be monitored by Russia’s FSB security service using a wide net of telephone and internet intercepts dubbed “PRISM on steroids” (the Russians said it was to counter the very real threat of a terrorist attack on the Games).

And Russia is a well-known haunt for criminal hackers – by one estimate Russia is the source for around a third of all the world’s viruses, Trojans and malware, and a hotbed of identity theft and credit card fraud.

Last week, NBC TV news in the US mounted what they called a demonstration of the risks – they opened up a Mac, a PC and an Android smartphone in a coffee shop in Moscow, and “Malicious software hijacked our phone before we even finished our coffee, stealing my information and giving hackers the option to tap or record my phone calls,” reporter Richard Engel said.

His two laptops were also compromised, with a stream of information going from one of them to an unknown destination within Russia.

The report was pooh-poohed by experts, who labelled it a beat-up.

Blogger Robert Graham called it “100 per cent fraudulent”, pointing out that in order to get hacked the reporter had omitted basic precautions, such as not downloading software from mysterious links in unfamiliar websites or emails.

“Richard Engel hacked himself by knowingly downloading a hostile Android app,” he said. The hacks that were demonstrated could equally easily happen anywhere else in the world.

NBC defended the story, saying the reporter had been specifically targeted by a Russian hacker and sent an email designed to trick him into downloading hostile software.

Nevertheless, many of the media here are taking precautions to guard their data.

The Columbia Journalism Review reported that some had gone as far as using ‘burner phones’ and new laptops containing no personal data.

Others took care to sweep their computer of all personal information including auto-saved passwords, before entering Russia.

Those taking more care belong to the bigger, better-resourced organisations, the CJR reported. Others don’t care as much.

“I don’t really care if the Russian government is reading everything I write,” Grantland’s Katie Baker told CJR in an email. “I care slightly more about whether Eastern European hackers are draining my bank account.”

She is avoiding using public Wi-Fi for that reason.

Most journalists seem more concerned about cybercrime than government surveillance.

But then there’s that odd comment from Dmitry Kozak, the deputy prime minister responsible for the Olympic preparations.

In trying to deflect criticism of hotel problems, he said: “We have surveillance video from the hotels that shows people turn on the shower, direct the nozzle at the wall and then leave the room for the whole day.”

A spokesman later clarified there was “absolutely no” surveillance in hotel rooms or bathrooms occupied by guests, and the minister was referring to surveillance of premises during construction and cleaning before the Olympics.

So that’s alright then.

This story Administrator ready to work first appeared on Nanjing Night Net.